Central Statistics Office to review impact of steel on GDP growth

The new series of GDP, based on the globally accepted market prices methodology, is available from 2011-12. Updating the numbers for the eight previous years could help to explain the jump in growth following the switch to the new series.Kirtika Suneja | ET Bureau | January 16, 2017, 08:04 IST

NEW DELHI: National accounts for the eight years starting 2004 are unlikely to be revised in line with a controversial new methodology any time soon because a high-profile committee has asked the statistics office to re-examine the impact of cement and steel on the growth numbers.

The new series of GDP, based on the globally accepted market prices methodology, is available from 2011-12. Updating the numbers for the eight previous years could help to explain the jump in growth following the switch to the new series.

After the new series was introduced, FY14 growth was amended to 6.9%, up from 4.7% estimated initially. For FY13, growth was revised to 5.1% from 4.5%. In FY16, GDP growth was pegged at 7.6% even as the Index of Industrial Production gained only 2.4%, raising concerns about the data. The data for the previous years will not be made public until the revised numbers compiled by the Central Statistics Office are examined again by the committee comprising officials from the finance ministry, Niti Aayog and other experts.

“When we looked at the back series, we saw that the GDP sharply went up when cement and steel did well and vice-versa. We have asked CSO to remove the impact of these two from manufacturing so as to avoid double counting,” said an official, who was present at a meeting of the committee. The impact on growth was as large as 2.5-3 percentage points, the official said.

The construction sector is not directly measured in the national accounts and is estimated using inputs such as cement and steel consumption. These two inputs are also used to calculate manufacturing growth, based on data from company balance sheets, which may have resulted in double counting.

ET had reported in August that a high-profile committee will scrutinise the GDP back series data before the statistics office puts it out in the public domain, hoping to avoid further controversy over the national accounting numbers. “We have been asked to again look into the corporate data because we don’t have data from the Ministry of Corporate Affairs for calculating back series and were using alternative databases like CMIE,” said an official from CSO. CMIE (Centre for Monitoring Indian Economy) is a Mumbai-based business information company.

The exercise may be delayed further because the CSO is preparing the second advance estimates of national income for 2016-17 and the third-quarter GDP data, which are due on February 28. “Another brainstorming session will happen after they examine the new numbers and till then, we can’t make the back series data public because they will decide after analysing the report if we can,” said another CSO official.

The back series will align the GDP numbers with the new methodology put in place by the CSO in 2015. It will help compare recent GDP growth over a longer period since the new system revised the base year to FY12 from FY05, besides introducing a change in methodology and sources of data collection.

The government doesn’t want similar doubts to cloud the data for the earlier years as it could stoke another round of controversy if growth during the term of the previous government is shown to have been slower than recorded.

Packed with 50+ safety and security features, 30+ premium features and 20+ pioneering technologies, the Jeep Compass is manufactured in FCA’s joint venture manufacturing facility in Ranjangaon, near Pune, and is made of 65% locally sourced components.